What happened

Shares of Nvidia (NVDA -10.01%) climbed higher Thursday morning, jumping by as much as 3.4%. As of 1:25 p.m. ET, the stock was still up 0.8% -- even as the three major U.S. indexes lost ground.

The catalyst that sent the semiconductor specialist higher was news that the U.S. will further limit the export of certain types of high-end chips to China.

So what

The Biden administration is expected to announce new restrictions preventing the most cutting-edge semiconductors -- and the technology needed to fabricate such chips -- from being sold to China, according to a Wall Street Journal article citing "people familiar with the situation." 

This move is intended to curb the flow of U.S. processor technology to China, particularly when it comes to high-end chips used in military systems, artificial intelligence (AI) technology, and data processing. The rules could ultimately place additional limitations on the sale of cutting-edge processors to China and Russia. While the move could limit competition from foreign manufacturers, it could also cut into U.S. companies' semiconductor sales, so it's difficult to calculate the overall impact of the new policies.

Now what

This is the latest chapter in an ongoing saga as the U.S. government and its allies work to keep place stricter controls on sensitive technology.

The recently passed Chips and Science Act of 2022 should provide some relief that will counter the potential negative impact on U.S. companies from these added regulations. The Act provides roughly $53 billion in financial assistance to increase domestic semiconductor manufacturing, as well as $24 billion in tax breaks and other incentives. The Commerce Department is expected to soon begin doling out these funds in the form of factory-building grants, research funding, and tax breaks to help encourage domestic production, according to the article. 

Early last month, Nvidia announced in a regulatory filing that the U.S. had imposed new licensing requirements on its high-end A 100 and H100 tensor core graphics processing units (GPUs), which are used in AI applications and data centers -- as well as any integrated systems that use the processors -- restricting their exports to China, Hong Kong, and Russia. At the time, Nvidia said the new limitations were expected to affect roughly $400 million in potential sales.